The DC Circuit today struck down EPA's Cross State Air Pollution Rule (CSAPR), the EPA's latest attempt to regulate sulfur dioxide and nitrogen oxide emissions from power plants, using at least somewhat flexible, market-based tools.
I'm currently working through the opinion and will have more to say later. But one thing is clear already - this is a mess.
CSAPR would have replaced the Bush Administration's Clean Air Interstate Rule (CAIR), which was struck down by the same court in 2008. Initially the court vacated CAIR, but in an unusual move it quickly reconsidered, remanding it to the agency for revision instead. CSAPR was the product of that revision, and with its rejection CAIR is once again the law of the land. It will remain in place until EPA is able write a new rule and try again, by which time it will have been in place for more than five years after being deemed illegal.
This kind of zombie regulation is in no one's interest - not industry, which would prefer certainty, not environmentalists, who would prefer EPA devote its resources to other pressing environmental problems, and not the American people, who deserve environmental regulation that is both effective and actually complies with the limits to regulatory authority their elected representatives in Congress have set (however wise or unwise those limits may be).
Each revision of sulfur dioxide regulation in the past decade has reduced the ability of emitters to trade under the cap, increasing the costs of compliance without increasing environmental benefit. The successful sulfur dioxide trading program implemented in the 1990s has been slowly killed from within. That's not good, but EPA had no good choices - either don't touch sulfur dioxide rules, despite strong evidence that tighter rules were cost-benefit justified, or implement new, inflexible rules using traditional Clean Air Act tools. The agency has consistently tried to have it both ways. This ruling probably marks the end of that attempt.
The solution is Congressional action. Bills to give EPA broader discretion to regulate flexibly have been debated repeatedly but have never passed. The fix is not difficult - "3P" bills that would fix this and other problems with the Clean Air Act are only a few pages long. But prospects for passage seemed dim. Perhaps this decision will rekindle interest, but it will almost certainly have to wait until after November.
